According to Forbes, 65% of companies say that they were able to offer a more impressive customer experience by improving their data analysis. These days, data is the most valuable asset a founder can have. Financial, product and marketing decisions are based on carefully measured data collected over time.
Today, there’s no reason not to connect with others to gain insight into business tactics. Networking with fellow founders and others in a similar position to yourself is the easiest and fastest way to learn. It’s the closest you’ll get to hands-on experience without actually doing anything yourself. You might wonder where you might access such a community, luckily, Ramen Club was founded to fulfill this exact need.
What is customer validation?
Customer validation refers to identifying the customer segment that most closely resonates with your business. As an essential part of the product development process, product managers and founders use customer validation in order to make business decisions.
As a founder, if you’re hanging on by your bootstraps, you might not have a dedicated product manager just yet. That’s totally fine and you’ll get there one day if that’s what you want. For now, you can focus on performing customer validation yourself.
In fact, we highly recommend that you keep doing product management and customer validation yourself, until you’ve filled other important functions (e.g., marketing, sales, dev, etc.). Why? Because it helps you intimately understand what the market and your customers want, and allows you to adapt your offerings accordingly.
There are all kinds of factors that can help you find your target customer. The sooner you can identify your customer base, the sooner you can reach product market fit, scale growth, and hire!
What to consider when trying to identify your customer segment:
- Habits: think about what your customer does every day. What could you create to make something in their life easier?
- Needs: If you can identify the immediate and most common needs of your ideal customer, you can start to work out solutions and turn them into products.
- Problems: Think about what types of recurring problems your customer might face. Do they live somewhere with a lot of noise? Limited parking? Try to imagine their routine and identify where they might run into setbacks.
- Perspectives: If you can predict how someone is going to interpret something, you’re almost already inside their mind. But before you can do that, you have to take time to understand where your customer gets their insight from.
Down the line, you also need to ask questions about how they use your product or service:
- Most-used features: Which products/services do they use the most when interacting with your offering?
- Which segment pays the most? Which customer segment provides the highest amount of revenue?
- Highest-revenue features: What’s being used and what’s bringing in the cashflow are fundamentally two different things that you need to figure out in order to find your ideal customer profile.
- Different flows or customer journeys they take on to using your product: Ghost increased their conversion rate by 1000% just by optimising their onboarding process, so finding the right onboarding flow can literally lead to PMF. Take notes.
Identifying your customer demographics and their product habits is one thing. However, identifying your customer segment is deeper than that. Customer validation allows you to take it a step further and validate user needs as a way to gain business insight and further your product development process.
Psst, if you need some help with evaluating these elements, consider the Ramen Club, the #1 founder community focusing on real connections and mentorship to take your entrepreneurial pursuits to ramen profitability and beyond.
Customer validation process
There are a few different ways to go about validating your customer. After you identify their habits, needs, problems, and perspectives, you are better informed to create the criterion to measure your potential customers against.
Create a buyer profile
Your buyer profile will act as a fictional representation of your real customer’s behavior. Using actual data collected about existing customers, you combine this with market research to create an all-encompassing persona.
At Ramen Club, our members often share growth tactics relating to customer acquisition and reaching product market fit. When it comes to identifying your target customers, most of us agree on these things:
- If you don’t have customers yet, interview your prospects and ask them questions about their problems and needs.
- Focus on executing rather than planning or strategizing. Overthinking can lead to paralysis by analysis and ironically prevent you from finding your target customer.
- In the beginning, feel free to assume what your target customer is, and make sure that your messaging addresses them directly. Founders can sometimes get too vague about what they offer and attract no one in the process.
When creating your buyer profile you’ll want to consider those previously mentioned, in addition to motivations and goals. After you have time to consider how you might provide a solution for a customer, you can take it a step further and work on a product that enriches their goals or enhances their motivation.
Value proposition canvas
The value proposition canvas is a tool recommended by Strategyzer and it allows you to more easily assess your customers’ needs. As you already know, the more you know about customer needs, the more insight you gain into the product you need to create.
The value proposition canvas considers three main components when assessing the user.
- Gains: when the customer uses your product, what do they gain?
- Pains: What customer issue does your product provide relief for?
- Jobs: What is the customer able to accomplish with your product?
Once you have these ideas fleshed out, it’s time to move over to the value map. Which can also be broken up into three sections:
- Gain creators: anything that creates a new experience for the user or improves upon an existing one.
- Pain relievers: These will be anything that you can offer that removes an inconvenience or source of suffering for the customer.
- Products & services: in this section you can list every product and service you have to offer.
While this is a basic overview, some founders will go into much more detail and use many more metrics and tools in addition to the value proposition canvas. This is just a foundational tool for you to reference and get used to as you develop your entrepreneurial toolkit.
Customer validation questions
Customer validation helps entrepreneurs learn more about how they can scale their business. Part of that involves optimizing your product and service range to return the most profit possible. When conducting the market research to carry out your customer validation process, you might be wondering what questions to ask when you do customer outreach.
Here’s a list of questions you can include in your interviews, with some extra context to consider.
- Is anything unclear about my offer?
You want to make sure you can predict your customer’s expectations. Making your product’s message clear and straightforward will lead to less problems down the road. Just like the old saying goes, if you do it right the first time, you won’t have to keep fixing it.
- What makes this product valuable to you?
A huge part of marketing depends on an emotional response from the customer. More than half of our purchases are usually dictated by our emotions. Whether it’s because we saw something on TV or because it was passed down through generations. Gain an understanding of why your customer is interested in your products.
- Do you feel like there are any missing features?
Now is the time to find out if you’ve left anything out. Customers have a great intuition when it comes to product development because they only need to follow their gut!
- Is there anything about the product that would cause you hesitation?
If you can pinpoint where exactly you lose your customer along their purchase decision, you can develop future products that mitigate that response.
- How likely would you be to purchase this product, on a scale from 1-10?
The old NPS scoring system. Always encourage the customers you speak with, to be honest with you. If someone is only 70% likely to purchase your product, you need to find out why. Otherwise, you can continue with your efforts that are resulting in customer purchases.
- What do you think this product is worth?
Pricing is a huge part of running a business. If you launch a new product at a price point that is way too high, you could cause what should have been a successful company to fail in an instant. Make sure you are aware of your product’s worth and make sure your customers can see the same value.
- Do you have any other recommendations or feedback you’d like to share with me?
Of course you always want to open the floor to the customer to share anything they might feel like you didn’t address. Remember—your customer has all the data you need, so consider these interactions valuable and reward them for their participation.
Sometimes it helps to test questions out on friends and family before doing any formal customer outreach. If you subscribe to Ramen Club, you can drop a line anytime and check in with a mentor or fellow bootstrapper about a question you might be considering.
Validate the need for your product
At the end of the day, you won’t be able to create profitable products without identifying your customer segment. Once you gain insight into your target customer and the different facets of their character, behavior, and life experience, you can create curated products that are far more likely to take off.
If you’re ready to see where your business will take you next, you have to work on customer validation. The best part about today’s online world is that we have endless resources to use along our journeys.
Join Ramen Club if you’d like to get instant access to some of the world’s best start-up advice and collaborate with fearless bootstrappers. The world needs your ideas, you just have to get through this process to identify and create them.